A Reminder For AC Members

As excitement builds over the possibility of an economic AC play and the opportunity for some private mineral owners to receive an offer to lease, I think a note of caution is in order. The history of exploration and production, or more specifically the lack of production, in the parishes currently being targeted for leasing programs appears to lend a certain mind set to expectations. There is a common history among numerous land/mineral owners of multiple leases over decades of time with no successful production which, for some, leads to an over emphasis on the bonus dollar amount and less concerning the other lease terms.

It is worth noting that the prior history of largely vertical drilling and lack of technology specific to very challenging formations is not a good decision making model for what has become the new normal in the last ten years. If you are following the general technical advances across all basins and the success of the AC in Texas in particular, you ought to have an increased expectation that this time may be different for central LA. I strongly suggest that GHS members with significant size acreage ownership to get the assistance of a law firm experienced in negotiating O&G leases for land owners. It is still too early to fully know how this AC play will turn out (see the TMS) however if it does become economic, the lease bonus will soon be of less long term value than a larger royalty fraction. For those who have surface ownership there are very important terms beyond the bonus. If ignored those terms may create regrets for decades to come.

My general rule of thumb is: if the bonus payment for your signature on a O&G lease will make a significant difference in your financial security or rescue you from an immediate financial emergency, it's acceptable to place your emphasis on the bonus. If however you, and your family, have a measure of financial security and do not need a cash bonus for some compelling need, have patience and get some professional help. If this AC play is a bust, you may regret to some extent not taking a lease in time. If this AC play is a success, you will almost certainly get considerably better lease terms and the long term difference in royalty revenue could easily be many thousands (or hundreds of thousands) of dollars more than your bonus check.

Probably because that depth is not tied to any prospective formation - the AC is deeper in the EOG area and not present at the shallower depths.

Without having a log from the EOG area in front of me, I am guessing that the equivalent 11,000' interval is in a shaly / silty part of the Upper Cretaceous section that overlies the Austin Chalk interval. And if this is the type of section present, its prospectivity will be minimal.

Side Note - if anyone has a log for this area, please comment on the shallower section as to lithology and formation.

Deeper in terms of depth is not a simplistic issue - there may be a different pressure gradient between the EOG La area and Texas areas. As well as a different historical temperature gradient that will impact thermal maturity and the presence of wetter (oil / condensate / NGL's) vs gas.

Kirk's blog talks about EOG's 3D plans to extend into eastern Evangeline Parish. I pulled Seismic options for Evangeline Parish - there is a series of 48 month seismic options in T4S R3E along the St Landry Parish line.

PDF of these options (taken by Saur - a brokerage firm) is attached. Note the 20% royalty interest noted in the summary

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As exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More